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New Apprenticeship Levies and the Games Industry

Improving the number of apprenticeships in British industry is a top priority for the new government, which has set a demanding target of 3 million new apprenticeships over the next Parliament - a target which will be overseen by an specific implementation committee at the Cabinet Office.

To fund this the government proposes a new levy - a mandatory payment by businesses into a common pot which is then used to pay for shared benefits, such as in-work training and apprenticeships.

The Apprenticeship Levy was announced by the Chancellor in his July Budget. Although the details are still being worked out, this would be paid by all large businesses and, under the current plans, be used to fund apprenticeship schemes across all sectors.

The Budget document says: “This approach will reverse the long-term trend of employer underinvestment in training, which has seen the number of employees who attend a training course away from the workplace fall from 141,000 in 1995 to 18,000 in 2014.”

New Apprenticeship Levies and the Games Industry - Ukie's response

The games industry recognises that increasing the number of apprenticeships across British industry is an important priority for the new government. Together with others we are keen to work with the government to ensure that the impacts of levy are done in a way which is proportionate and effective to the objectives it hopes to achieves. The ultimate aim should be to create a fund which supports the specific talent needs of games comapnies of all sizes.

Ukie has been working with Creative Skillset to establish a series of principles and questions on how the levy would work in practice. In addition to asking questions about the scope of the new approach, the games industry is keen to ensure that factors specific to our high-skilled industry, such as specialist occupations and the desire to develop more degree apprenticeships, are considered. Ukie therefore supports Creative Skillset's 'principles' approach to the levy to develop the new standards required for apprenticeship delivery, including a quality assurance process that ensures simple, consistent, high quality infrastructure. We also support calls to maintain a strong evidence base of labour market, schools and skills information to inform future activity.

For games and VFX contributions for apprenticeships currently arise through co-investment models, so new levies would constitute a step-change for larger firms solely devoted to games production. For the wider creative sector, as with some others, the issue is complicated by existing voluntary levies. For example, there are four skills levies in animation, film, high-end TV and Children’s TV (industries with common characteristic of highly freelance workforce) and many SMEs already contribute to these levies.

If the levy model is not designed with the games and other creative industries’ needs in mind, it will result in significant employer investment being diverted away from these industries to support growth in other parts of the economy.

In addition, many tech and creative firms are investing in initiatives to enhance the new Computing curriculum introduced in English schools in 2014. This investment includes support for after-school clubs, teacher training and work on primary-secondary school transition to ensure that pupils are inspired to make better educational choices from an early age rather than just 16+.

There is also a concern that employers will simply remove funding from professional development budgets – where they exist – to pay for the levy, resulting in less staff development. Both of these would be perverse outcomes of the levy, and would have a negative impact on the highest growth industries of the economy and our interest in long-term talent development.

We therefore argue:

Contributions to the levy from Creative Industries employers should be invested for the benefit of the Creative Industries across the UK;

All levy contributions across the UK should be invested in skills development alongside existing public investment in skills, not as a replacement for it;

Creative Industries employers, working collaboratively, should retain strategic oversight and direction of how their full levy contributions are invested, in alignment with existing industrial strategies;

Creative Industries employers want a joined-up UK-wide industrial approach to ensure that levy contributions from the Nations are invested in these Nations to create opportunities for local people to enter the Creative Industries. Over the coming months we understand there will be a dialogue to further explore how the levy could best be utilised across the UK.

Unless apprenticeship levy funding is used for developing new standards applicable to the games industry, employers in games, VFX and post-production companies would not be able to spend their digital vouchers effectively. They would be unable to employ apprentices and, at the same time, there could be less money available to achieve their wider training plans if they are paying for apprenticeships in other industries at the expense of training in their own sectors. Moreover games investment in apprenticeships has so far been focused on over-18 Higher Apprenticeships which will give young adults that skills they need to develop careers and businesses. The Next Gen Skills Academy has started the development of level 4 Higher Apprenticeships with their Games and VFX employer consortia of over - mainly SME - 100 employers.

The best way to enable the Government to reach its target would be to make the levy as flexible as possible. In particular, the design of the levy should incorporate the needs of the large numbers of SMEs in our sector. In sectors where apprenticeships have not been a traditional entry route, like games, sufficient standards are not yet in place employers will not be able to access their funding and use it in the most effective way possible. In order to speed the process to meet the Government's target on apprenticeship starts, we agree with the Next Gen Skills Academy that employers be allowed to use digital vouchers to fund the development of standards.

Separately, the government are considering another levy to apply to the immigration system to apply to every company that brings in a worker on a 'Tier 2' (high-skilled) visa. Ukie has engaged with the Migration Advisory Committee throughout this process, as the ability to attract high-tech foreign talent in order to bring business to the UK is an important concern for our members. We are concerned at the prospect of this second requirement on businesses, in the light of our specific issues around the levy.